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Current & Critical

Spine Company M&A Picks Up in 3Q18

September 21, 2018

By Rob Meyer and Julie A. Vetalice

Eight—yes, eight—spine acquisitions were announced in the four weeks since we published our analysis, “Spine Merger & Acquisition Activity Going Strong,” which stated that we expect players of all sizes will continue to make purchases in order to remain competitive. The eight transactions we reported between August 22 and September 22 affirm our assertions. The global spine market comprises nearly 300 companies; players need broad portfolios or novel technologies to vie for market share today.

We’ve tracked 31 mergers and acquisitions in the spine space from 2017 through mid-September 2018. The full list can be found online; highlights are included in the table below. From the eight that took place at the end of the third quarter, here are some notable mentions.

The most significant announcement was Stryker’s definitive agreement to purchase K2M for $1.4BB. Our estimates indicate that upon close of the transaction, Stryker will rank among the top three players in spine, narrowly stepping over NuVasive. The new lineup will be #1 Medtronic, #2 DePuy Synthes and #3 Stryker. K2M was #7 on our list prior to the transaction. The purchase allows Stryker to gain access to K2M’s robust portfolio of complex and minimally invasive products, filling gaps in its own portfolio. Additionally, the acquisition combines two forces promoting implants that use proprietary additive manufacturing processes: Stryker with its Tritanium and K2M with its Lamellar Titanium Technology.

Stryker also announced a definitive agreement to purchase Invuity and its portfolio of single-use, lighted instruments that deliver enhanced visualization for multiple applications, including spine. Invuity’s platform product is Intelligent Photonics® devices that provide direct visualization of the surgical cavity, enabling enhanced precision.

Globus Medical acquired Nemaris and its Surgimap software used to preoperatively plan spine surgery. Globus plans to incorporate Surgimap into its ExcelsisusGPS robotic guidance and navigation systems, as well as future products, in order to streamline workflow and enable more robust data analytics. The acquisition complements Globus’ 2Q18 purchase of KB Medical, developer of the AQrate Robotic Assistance system. Surgimap is widely used by Globus’ competitors, including DePuy Synthes, K2M, Medtronic, NuVasive, Orthofix, Stryker and Zimmer Biomet. Questions remain about those license agreements.

Johnson & Johnson Medical GmbH made a definitive agreement to acquire Emerging Implant Technologies (EIT), a manufacturer of 3D-printed titanium interbodies for spinal fusion. EIT’s implants are manufactured from EIT Cellular Titanium® that yields a porosity of 80% and are designed to mimic trabecular bone structure (obviating the need for bone graft). EIT entered the U.S. market in 4Q17. Ex-U.S, EIT’s products have been used in >10,000 procedures in >15 countries, including Australia, France, Germany, Korea and the Netherlands.

Medtronic entered into a definitive agreement to acquire Mazor Robotics for $1.64BB in cash in a transaction that is slated to close in January 2019. The announcement is not surprising, given their relationship that began in 2016 with a multi-phase commercial agreement for co-promotion, co-development and exclusive global distribution of certain Mazor products, as well as an equity investment in Mazor by MDT. This led to >80 installations of the Mazor X™ Robotic Guidance platform for spine surgery since the system's launch in 2016. The partnership pairs Mazor's guidance tools with Medtronic's implants, navigation and imaging technologies.

Other M&A that took place included CTL's purchase of Amedica's spine business, IZI Medical's acquisition of Benvenue Medical’s vertebral augmentation portfolio and Zavation's acquisition of Pan Medical. Further details off spine M&A activity from 2017 through mid-September 2018 is outlined below.

DETAILS

ANNOUNCED

Alphatec Spine acquired SafeOp Surgical, provider of neuromonitoring technology, for $15MM. SafeOp’s technology automates SSEPs (Somatosensory Evoked Potentials), and is designed to obviate the need for a technician or other neuromonitoring professional in most procedures.

1Q18

Bioventus entered into a definitive agreement to divest its next-gen bone morphogenetic protein development program to Viscogliosi Bros. The transaction is slated to close in 3Q18. A new company will be formed and initiate a clinical program to evaluate the BMP for spinal fusion.

3Q18

CoreLink acquired Expanding Orthopedics, developer of the FLXfit line of expanding interbody devices. CoreLink gains the FDA-cleared expanding, articulating FLXfit and FLXfit 15 titanium TLIF interbody systems, as well as an array of patents and a development pipeline addressing expandable interbodies and spinal fusion.

2Q18

CTL acquired Amedica’s spine business and will change its name to CTL Amedica. CTL will exclusively own the portfolio of Amedica’s metal and silicon nitride (SiNi) spine devices, and will have access to future SiNi spine products. CTL gains the entire existing inventory of Taurus, Preference and Valeo products, along with global regulatory clearances and IP.

3Q18

Fuse Medical, a U.S. distributor, acquired Maxim Surgical, manufacturer of interbody spacers and distributor of a variety of spine, sports medicine and biologics. Its portfolio includes the Maxim Surgical X-Treme Interbody Fusion System, which received FDA 510(k) clearance in 2013. Fuse intends to develop additional spinal implants.

3Q18

Globus Medical acquired KB Medical, Switzerland-based developer of the AQrate Robotic Assistance system. GMED doesn’t plan to commercialize the robot, but will use its technology to shape future enhancements to the ExcelsiusGPS robotic guidance and navigation system.

2Q18

Globus Medical acquired Nemaris, developer of Surgimap software used to preoperatively plan spine surgery. The software will be included in ExcelsiusGPS and other navigation systems.

Medtronic entered into a definitive agreement to acquire Mazor Robotics for $1.64BB in cash in a transaction that is slated to close in 1Q19.

3Q18

NuVasive acquired SafePassage, provider of intra-op neurophysiological monitoring (IONM) services. The company joined NUVA’s Clinical Services business, where it contributed $4.5MM in 1Q18 revenue. The agreement reportedly positions NCS as the largest provider of outsourced IONM services in the U.S.

1Q18

Orthofix purchased Spinal Kinetics for $45MM in cash plus up to $60MM in potential milestone payments, including FDA Premarket Approval of the M6-C cervical disc for single-level use. The acquired portfolio comprises the M6-C and M6-L cervical and lumbar artificial discs, which are CE Marked in the EU. Per the 2Q18 OFIX earnings call, M6-C is on target for the PMA in 2019—likely mid-year.

1Q18

RTI Surgical entered into an agreement to acquire Zyga Technology, gaining access to the SImmetry Sacroiliac Joint Fusion system. (The company had also developed the Glyder Facet Restoration Device. SImmetry is commercially available, while Glyder is not.)

1Q18

Safe Orthopaedics acquired the salesforce of Qspine, its U.K. distributor since 2014. Sales are expected to begin contributing to growth in 2H18. Qspine’s single-use sterile illuminated radiolucent SURE retractor, recently CE Mark approved, is complementary to Safe Ortho’s SteriSpine kits to treat spinal fracture. Safe Orthopaedics will solely distribute SURE in France, and will promote it in the U.K.

2Q18

Stryker announced a definitive agreement to acquire K2M for $1.4BB. The purchase will provide Stryker a broader portfolio of complex and minimally invasive products, as well as increase its market share in the space. The acquisition is expected to close in 4Q18.

3Q18

Stryker announced a definitive agreement to purchase Invuity for $190MM. Invuity has a portfolio of single-use, lighted instruments that deliver enhanced visualization for several applications, including orthopaedic arthroplasty and spine. The transaction is expected to close in 4Q18.

3Q18

Zavation acquired Pan Medical (PanMed), a manufacturer of products used in kyphoplasty and interventional radiology. PanMed is developer of CurvePlus, reportedly the only FDA-cleared kyphoplasty system that allows for both the balloon and cement to be passed through a curved needle.